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Why is defederation an option when Limit/Mute exist?
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Server admins are just people, generously running a server, for you. This costs them time and money to do. If they don't want their server amplifying the content from some other server that they see as problematic, they absolutely should have that option.
And if I as a user want to join a service that does not feature nazi content at all, I should have that option as well.
I don't want to have to handle this shit on my own: I want admins and mods to do it for me. If I'm not happy with their work I'll leave for another instance. But if I have to block the Nazis myself I would consider that a huge problem and probably wouldn't use the service at all.